Payroll debit card fees harmful to employees

Thursday

Jun 20, 2013 at 2:00 AM

As a member of the House Labor Committee, I was asked to serve on the Committee of Conference discussion of two bills. The first, HB 357, would restrict the use of credit history in hiring decisions. While errors and security breaches can lead to poor credit reports, it is also possible to ruin your credit due to living slightly above your means, a layoff or medical expenses that are not fully covered by insurance. In any case, the applicant may be of good character, but the ability to earn a living and repay the debt can be denied without the passage of this bill. Several exceptions for jobs in financial service and the like were included and the bill passed the House 213-144. The Senate opted to attach this employee-friendly bill to an unfriendly one that had failed in the House.

June 18 — To the Editor:

As a member of the House Labor Committee, I was asked to serve on the Committee of Conference discussion of two bills. The first, HB 357, would restrict the use of credit history in hiring decisions. While errors and security breaches can lead to poor credit reports, it is also possible to ruin your credit due to living slightly above your means, a layoff or medical expenses that are not fully covered by insurance. In any case, the applicant may be of good character, but the ability to earn a living and repay the debt can be denied without the passage of this bill. Several exceptions for jobs in financial service and the like were included and the bill passed the House 213-144. The Senate opted to attach this employee-friendly bill to an unfriendly one that had failed in the House.

Sen. Jeb Bradley's bill, SB 100, would remove the requirement for employers to offer paper checks as an option for payment of wages. Proponents cited cost savings for employers using electronic methods such as direct deposit and payroll debit cards. Current law does not exclude these methods, but leaves the choice to the employee. When presented with cost savings and other advantages of direct deposit, most employees would agree to receive their pay in this manner. Freedom of choice is preserved; employer and employee see mutual benefit with no need for legislation, right?

However, the main focus of the testimony heard in committee was payroll debit cards. A lobbyist flew in from California twice to promote these cards and little time was devoted to direct deposit into bank accounts. The debit cards are so convenient for shopping in stores and buying gas, and people may be paying fees to cash checks if they don't have an account. Why are the card companies so concerned with the payroll cost of employers and convenience of employees? Perhaps it is the many card fees that can siphon off substantial pieces of employee wages. I think the bigger prize is the transaction fees that merchants pay for the privilege of accepting card payments. Small businesses face additional expenses, which must be absorbed or passed on to consumers. This is not a business-friendly bill unless you are in the payroll card business.

We were told that 14 percent of New Hampshire residents are unbanked or under-banked and that some people cannot have bank accounts. Actually, there is no barrier to opening an account and credit unions will do so with just $5. They also offer debit cards linked to the account, but has an option for the employee to either use or avoid. A credit union account will allow for direct deposit and can lead to favorable rates for car loans. A payroll debit card can lead to miscalculations and fees that eat away at wages. The N.H. Department of Labor testified in opposition to this bill because it answered the calls from employees whose pay has disappeared.

SB 100 originated in the Senate, where it passed 20-4, but the House Labor committee voted to kill the bill and was upheld by the full House with a bipartisan vote of 235-93. It may be of interest that at the time of these votes, nine senators and 71 representatives were receiving their mileage payments via paper checks. I expect this will change in view of potential cost savings for the state and taxpayers.

In the end, we could not accept the Senate attaching this unnecessary, predatory bill that would harm workers, and we will revisit the issue of credit history privacy in the next session.

Michael Cahill

State representative

Rockingham 17

Newfields, Newmarket

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